Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2021

Federal RegisterAug 10, 2020

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 412

[CMS-1729-F]

RIN 0938-AU05

Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2021

AGENCY:

Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION:

Final rule.

SUMMARY:

This final rule updates the prospective payment rates for inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2021. As required by statute, this final rule includes the classification and weighting factors for the IRF prospective payment system's case-mix groups and a description of the methodologies and data used in computing the prospective payment rates for FY 2021. This final rule adopts more recent Office of Management and Budget statistical area delineations and applies a 5 percent cap on any wage index decreases compared to FY 2020 in a budget neutral manner. This final rule also amends the IRF coverage requirements to remove the post-admission physician evaluation requirement and codifies existing documentation instructions and guidance. In addition, this final rule amends the IRF coverage requirements to allow, beginning with the second week of admission to the IRF, a non-physician practitioner who is determined by the IRF to have specialized training and experience in inpatient rehabilitation to conduct 1 of the 3 required face-to-face visits with the patient per week, provided that such duties are within the non-physician practitioner's scope of practice under applicable state law.

DATES:

These regulations are effective on October 1, 2020.

Applicability dates:

The updated IRF prospective payment rates are applicable for IRF discharges occurring on or after October 1, 2020, and on or before September 30, 2021 (FY 2021).

FOR FURTHER INFORMATION CONTACT:

Gwendolyn Johnson, (410) 786-6954, for general information.

Catie Cooksey, (410) 786-0179, for information about the IRF payment policies and payment rates.

Kadie Derby, (410) 786-0468, for information about the IRF coverage policies.

SUPPLEMENTARY INFORMATION:

Availability of Certain Information Through the Internet on the CMS Website

The IRF PPS Addenda along with other supporting documents and tables referenced in this final rule are available through the internet on the CMS website at

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS.

We note that in previous years, each rule or notice issued under the IRF PPS has included a detailed reiteration of the various regulatory provisions that have affected the IRF PPS over the years. That discussion, along with detailed background information for various other aspects of the IRF PPS, is now available on the CMS website at

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS.

I. Executive Summary

A. Purpose

This final rule updates the prospective payment rates for IRFs for FY 2021 (that is, for discharges occurring on or after October 1, 2020, and on or before September 30, 2021) as required under section 1886(j)(3)(C) of the Social Security Act (the Act). As required by section 1886(j)(5) of the Act, this final rule includes the classification and weighting factors for the IRF PPS's case-mix groups (CMGs) and a description of the methodologies and data used in computing the prospective payment rates for FY 2021. This final rule adopts more recent Office of Management and Budget (OMB) statistical area delineations and applies a 5 percent cap on any wage index decreases compared to FY 2020 in a budget neutral manner. This final rule also amends the IRF coverage requirements to remove the post-admission physician evaluation requirement and codifies existing documentation instructions and guidance. In addition, this final rule amends the IRF coverage requirements to allow, beginning with the second week of admission to the IRF, a non-physician practitioner who is determined by the IRF to have specialized training and experience in inpatient rehabilitation to conduct 1 of the 3 required face-to-face visits with the patient per week, provided that such duties are within the non-physician practitioner's scope of practice under applicable state law. There are no updates in this final rule to the IRF Quality Reporting Program (QRP).

B. Waiver of the 60-Day Delayed Effective Date for the Final Rule

The United States is responding to an outbreak of respiratory disease caused by a novel (new) coronavirus that has now been detected in more than 190 locations internationally, including in all 50 States and the District of Columbia. The virus has been named “SARS-CoV-2” and the disease it causes has been named “coronavirus disease 2019” (abbreviated “COVID-19”).

Due to CMS prioritizing efforts in support of containing and combatting the COVID-19 PHE, and devoting significant resources to that end, as discussed and for the reasons discussed in section XIII. of this final rule, we are hereby waiving the 60-day requirement and determining that the IRF PPS final rule will take effect 55 days after issuance.

C. Summary of Major Provisions

In this final rule, we use the methods described in the FY 2020 IRF PPS final rule (84 FR 39054) to update the prospective payment rates for FY 2021 using updated FY 2019 IRF claims and the most recent available IRF cost report data, which is FY 2018 IRF cost report data. This final rule adopts more recent OMB statistical area delineations and applies a 5 percent cap on any wage index decreases compared to FY 2020 in a budget neutral manner. This final rule also amends the IRF coverage requirements to remove the post-admission physician evaluation requirement and codifies existing documentation instructions and guidance. In addition, this final rule amends the IRF coverage requirements to allow non-physician practitioners to perform some of the weekly visits, provided that such duties are within the non-physician practitioner's scope of practice under applicable state law.

D. Summary of Impact

Table 1—Cost and Benefit

Provision description

Transfers

FY 2021 IRF PPS payment rate update

The overall economic impact of this final rule is an estimated $260 million in increased payments from the Federal Government to IRFs during FY 2021.

II. Background

A. Statutory Basis and Scope

Section 1886(j) of the Act provides for the implementation of a per-discharge PPS for inpatient rehabilitation hospitals and inpatient rehabilitation units of a hospital (collectively, hereinafter referred to as IRFs). Payments under the IRF PPS encompass inpatient operating and capital costs of furnishing covered rehabilitation services (that is, routine, ancillary, and capital costs), but not direct graduate medical education costs, costs of approved nursing and allied health education activities, bad debts, and other services or items outside the scope of the IRF PPS. A complete discussion of the IRF PPS provisions appears in the original FY 2002 IRF PPS final rule (66 FR 41316) and the FY 2006 IRF PPS final rule (70 FR 47880), and we provided a general description of the IRF PPS for FYs 2007 through 2019 in the FY 2020 IRF PPS final rule (84 FR 39055 through 39057).

Under the IRF PPS from FY 2002 through FY 2005, the prospective payment rates were computed across 100 distinct CMGs, as described in the FY 2002 IRF PPS final rule (66 FR 41316). We constructed 95 CMGs using rehabilitation impairment categories (RICs), functional status (both motor and cognitive), and age (in some cases, cognitive status and age may not be a factor in defining a CMG). In addition, we constructed five special CMGs to account for very short stays and for patients who expire in the IRF.

For each of the CMGs, we developed relative weighting factors to account for a patient's clinical characteristics and expected resource needs. Thus, the weighting factors accounted for the relative difference in resource use across all CMGs. Within each CMG, we created tiers based on the estimated effects that certain comorbidities would have on resource use.

We established the Federal PPS rates using a standardized payment conversion factor (formerly referred to as the budget-neutral conversion factor). For a detailed discussion of the budget-neutral conversion factor, please refer to our FY 2004 IRF PPS final rule (68 FR 45684 through 45685). In the FY 2006 IRF PPS final rule (70 FR 47880), we discussed in detail the methodology for determining the standard payment conversion factor.

We applied the relative weighting factors to the standard payment conversion factor to compute the unadjusted prospective payment rates under the IRF PPS from FYs 2002 through 2005. Within the structure of the payment system, we then made adjustments to account for interrupted stays, transfers, short stays, and deaths. Finally, we applied the applicable adjustments to account for geographic variations in wages (wage index), the percentage of low-income patients, location in a rural area (if applicable), and outlier payments (if applicable) to the IRFs' unadjusted prospective payment rates.

For cost reporting periods that began on or after January 1, 2002, and before October 1, 2002, we determined the final prospective payment amounts using the transition methodology prescribed in section 1886(j)(1) of the Act. Under this provision, IRFs transitioning into the PPS were paid a blend of the Federal IRF PPS rate and the payment that the IRFs would have received had the IRF PPS not been implemented. This provision also allowed IRFs to elect to bypass this blended payment and immediately be paid 100 percent of the Federal IRF PPS rate. The transition methodology expired as of cost reporting periods beginning on or after October 1, 2002 (FY 2003), and payments for all IRFs now consist of 100 percent of the Federal IRF PPS rate.

Section 1886(j) of the Act confers broad statutory authority upon the Secretary to propose refinements to the IRF PPS. In the FY 2006 IRF PPS final rule (70 FR 47880) and in correcting amendments to the FY 2006 IRF PPS final rule (70 FR 57166), we finalized a number of refinements to the IRF PPS case-mix classification system (the CMGs and the corresponding relative weights) and the case-level and facility-level adjustments. These refinements included the adoption of the OMB's Core-Based Statistical Area (CBSA) market definitions; modifications to the CMGs, tier comorbidities; and CMG relative weights, implementation of a new teaching status adjustment for IRFs; rebasing and revising the market basket index used to update IRF payments, and updates to the rural, low-income percentage (LIP), and high-cost outlier adjustments. Beginning with the FY 2006 IRF PPS final rule (70 FR 47908 through 47917), the market basket index used to update IRF payments was a market basket reflecting the operating and capital cost structures for freestanding IRFs, freestanding inpatient psychiatric facilities (IPFs), and long-term care hospitals (LTCHs) (hereinafter referred to as the rehabilitation, psychiatric, and long-term care (RPL) market basket). Any reference to the FY 2006 IRF PPS final rule in this final rule also includes the provisions effective in the correcting amendments. For a detailed discussion of the final key policy changes for FY 2006, please refer to the FY 2006 IRF PPS final rule.

The regulatory history previously included in each rule or notice issued under the IRF PPS is available on the CMS website at

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/index?redirect=/InpatientRehabFacPPS/.

B. Provisions of the PPACA Affecting the IRF PPS in FY 2012 and Beyond

The Patient Protection and Affordable Care Act (PPACA) (Pub. L. 111-148) was enacted on March 23, 2010. The Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised several provisions of the PPACA, was enacted on March 30, 2010. In this final rule, we refer to the two statutes collectively as the “Patient Protection and Affordable Care Act” or “PPACA”.

The PPACA included several provisions that affect the IRF PPS in FYs 2012 and beyond. In addition to what was previously discussed, section 3401(d) of the PPACA also added section 1886(j)(3)(C)(ii)(I) of the Act (providing for a “productivity adjustment” for fiscal year (FY) 2012 and each subsequent FY). The productivity adjustment for FY 2021 is discussed in section VI.B. of this final rule. Section 1886(j)(3)(C)(ii)(II) of the Act provides that the application of the productivity adjustment to the market basket update may result in an update that is less than 0.0 for a FY and in payment rates for a FY being less than such payment rates for the preceding FY.

Sections 3004(b) of the PPACA and section 411(b) of the Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10, enacted on April 16, 2015) (MACRA) also addressed the IRF PPS. Section 3004(b) of PPACA reassigned the previously designated section 1886(j)(7) of the Act to section 1886(j)(8) of the Act and inserted a new section 1886(j)(7) of the Act, which contains requirements for the Secretary to establish a quality reporting program (QRP) for IRFs. Under that program, data must be submitted in a form and manner and at a time specified by the Secretary. Beginning in FY 2014, section 1886(j)(7)(A)(i) of the Act requires the application of a 2 percentage point reduction to the market basket increase factor otherwise applicable to an IRF (after application of paragraphs (C)(iii) and (D) of section 1886(j)(3) of the Act) for a FY if the IRF does not comply with the requirements of the IRF QRP for that FY. Application of the 2 percentage point reduction may result in an update that is less than 0.0 for a FY and in payment rates for a FY being less than such payment rates for the preceding FY. Reporting-based reductions to the market basket increase factor are not cumulative; they only apply for the FY involved. Section 411(b) of the MACRA amended section 1886(j)(3)(C) of the Act by adding paragraph (iii), which required us to apply for FY 2018, after the application of section 1886(j)(3)(C)(ii) of the Act, an increase factor of 1.0 percent to update the IRF prospective payment rates.

C. Operational Overview of the Current IRF PPS

As described in the FY 2002 IRF PPS final rule (66 FR 41316), upon the admission and discharge of a Medicare Part A fee-for-service (FFS) patient, the IRF is required to complete the appropriate sections of a Patient Assessment Instrument (PAI), designated as the IRF-PAI. In addition, beginning with IRF discharges occurring on or after October 1, 2009, the IRF is also required to complete the appropriate sections of the IRF-PAI upon the admission and discharge of each Medicare Advantage (MA) patient, as described in the FY 2010 IRF PPS final rule (74 FR 39762 and 74 FR 50712). All required data must be electronically encoded into the IRF-PAI software product. Generally, the software product includes patient classification programming called the Grouper software. The Grouper software uses specific IRF-PAI data elements to classify (or group) patients into distinct CMGs and account for the existence of any relevant comorbidities.

The Grouper software produces a five-character CMG number. The first character is an alphabetic character that indicates the comorbidity tier. The last four characters are numeric characters that represent the distinct CMG number. A free download of the Grouper software is available on the CMS website at

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Software.html.

The Grouper software is also embedded in the iQIES User tool available in iQIES at

https://www.cms.gov/medicare/quality-safety-oversight-general-information/iqies.

Once a Medicare Part A FFS patient is discharged, the IRF submits a Medicare claim as a Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L. 104-191, enacted on August 21, 1996)—compliant electronic claim or, if the Administrative Simplification Compliance Act of 2002 (ASCA) (Pub. L. 107-105, enacted on December 27, 2002) permits, a paper claim (a UB-04 or a CMS-1450 as appropriate) using the five-character CMG number and sends it to the appropriate Medicare Administrative Contractor (MAC). In addition, once a MA patient is discharged, in accordance with the Medicare Claims Processing Manual, chapter 3, section 20.3 (Pub. L. 100-04), hospitals (including IRFs) must submit an informational-only bill (type of bill (TOB) 111), which includes Condition Code 04 to their MAC. This will ensure that the MA days are included in the hospital's Supplemental Security Income (SSI) ratio (used in calculating the IRF LIP adjustment) for FY 2007 and beyond. Claims submitted to Medicare must comply with both ASCA and HIPAA.

Section 3 of the ASCA amended section 1862(a) of the Act by adding paragraph (22), which requires the Medicare program, subject to section 1862(h) of the Act, to deny payment under Part A or Part B for any expenses for items or services for which a claim is submitted other than in an electronic form specified by the Secretary. Section 1862(h) of the Act, in turn, provides that the Secretary shall waive such denial in situations in which there is no method available for the submission of claims in an electronic form or the entity submitting the claim is a small provider. In addition, the Secretary also has the authority to waive such denial in such unusual cases as the Secretary finds appropriate. For more information, see the “Medicare Program; Electronic Submission of Medicare Claims” final rule (70 FR 71008). Our instructions for the limited number of Medicare claims submitted on paper are available at

http://www.cms.gov/manuals/downloads/clm104c25.pdf.

Section 3 of the ASCA operates in the context of the administrative simplification provisions of HIPAA, which include, among others, the requirements for transaction standards and code sets codified in 45 CFR part 160 and part 162, subparts A and I through R (generally known as the Transactions Rule). The Transactions Rule requires covered entities, including covered health care providers, to conduct covered electronic transactions according to the applicable transaction standards. (See the CMS program claim memoranda at

http://www.cms.gov/ElectronicBillingEDITrans/

and listed in the addenda to the Medicare Intermediary Manual, Part 3, section 3600).

The MAC processes the claim through its software system. This software system includes pricing programming called the “Pricer” software. The Pricer software uses the CMG number, along with other specific claim data elements and provider-specific data, to adjust the IRF's prospective payment for interrupted stays, transfers, short stays, and deaths, and then applies the applicable adjustments to account for the IRF's wage index, percentage of low-income patients, rural location, and outlier payments. For discharges occurring on or after October 1, 2005, the IRF PPS payment also reflects the teaching status adjustment that became effective as of FY 2006, as discussed in the FY 2006 IRF PPS final rule (70 FR 47880).

D. Advancing Health Information Exchange

The Department of Health and Human Services (HHS) has a number of initiatives designed to encourage and support the adoption of interoperable health information technology and to promote nationwide health information exchange to improve health care and patient access to their health information. The Office of the National Coordinator for Health Information Technology (ONC) and CMS work collaboratively to advance interoperability across settings of care, including post-acute care.

To further interoperability in post-acute care settings, CMS continues to explore opportunities to advance electronic exchange of patient information across payers, providers and with patients, including developing systems that use nationally recognized health IT standards such as the Logical Observation Identifiers Names and Codes (LOINC), the Systematized

Nomenclature of Medicine (SNOMED), and the Fast Healthcare Interoperability Resources (FHIR). In addition, CMS and ONC established the Post-Acute Care Interoperability Workgroup (PACIO) to facilitate collaboration with industry stakeholders to develop FHIR standards that could support the exchange and reuse of patient assessment data derived from the minimum data set (MDS), inpatient rehabilitation facility patient assessment instrument (IRF-PAI), long term care hospital continuity assessment record and evaluation (LCDS), outcome and assessment information set (OASIS) and other sources.

The Data Element Library (DEL) continues to be updated and serves as the authoritative resource for PAC assessment data elements and their associated mappings to health IT standards. The DEL furthers CMS' goal of data standardization and interoperability. These interoperable data elements can reduce provider burden by allowing the use and exchange of healthcare data, support provider exchange of electronic health information for care coordination, person-centered care, and support real-time, data driven, clinical decision making. Standards in the Data Element Library (

https://del.cms.gov/DELWeb/pubHome

) can be referenced on the CMS website and in the ONC Interoperability Standards Advisory (ISA). The 2020 ISA is available at

https://www.healthit.gov/isa.

In the September 30, 2019

Federal Register

, CMS published a final rule, “Medicare and Medicaid Programs; Revisions to Requirements for Discharge Planning” (84 FR 51836) (“Discharge Planning final rule”), that revises the discharge planning requirements that hospitals (including psychiatric hospitals, long-term care hospitals, and inpatient rehabilitation facilities), critical access hospitals (CAHs), and home health agencies, must meet to participate in Medicare and Medicaid programs. The rule supports CMS' interoperability efforts by promoting the exchange of patient information between health care settings, and by ensuring that a patient's necessary medical information is transferred with the patient after discharge from a hospital, CAH, or post-acute care services provider. For more information on the Discharge planning requirements, please visit the final rule at

https://www.federalregister.gov/documents/2019/09/30/2019-20732/medicare-and-medicaid-programs-revisions-to-requirements-for-discharge-planning-for-hospitals.

On May 1 2020, ONC and CMS published the final rules, “21st Century Cures Act: Interoperability, Information Blocking, and the ONC Health IT Certification Program,”

(85 FR 25642) and “Patient Access and Interoperability”

(85 FR 25510) to promote secure and more immediate access to health information for patients and healthcare providers through the use of standards-based application programming interfaces (APIs) that enable easier access to electronic health information. The CMS Interoperability and Patient Access rule also finalizes a new regulation under the Conditions of Participation for hospitals (85 FR 25584), including CAHs and psychiatric hospitals, which will require these providers to send electronic patient event notifications of a patient's admission, discharge, and/or transfer to appropriate recipients, including applicable post-acute care providers and suppliers. These notifications can help alert post-acute care providers and suppliers when a patient has been seen in the ED or admitted to the hospital, supporting more effective care coordination across settings. We invite providers to learn more about these important developments and how they are likely to affect IRFs.

https://www.govinfo.gov/content/pkg/FR-2020-05-01/pdf/2020-07419.pdf.

https://www.govinfo.gov/content/pkg/FR-2020-05-01/pdf/2020-05050.pdf.

III. Summary of Provisions of the Proposed Rule

In the FY 2021 IRF PPS proposed rule, we proposed to update the IRF prospective payment rates for FY 2021. We also proposed to adopt more recent Office of Management and Budget statistical area delineations and apply a 5 percent cap on any wage index decreases compared to FY 2020 in a budget neutral manner. We also proposed to amend the IRF coverage requirements to remove the post-admission physician evaluation requirement and codify existing documentation instructions and guidance. Additionally, we proposed to amend the IRF coverage requirements to allow non-physician practitioners to perform certain requirements that are currently required to be performed by a rehabilitation physician.

The proposed policy changes and updates to the IRF prospective payment rates for FY 2021 are as follows:

• Update the CMG relative weights and average length of stay values for FY 2021, in a budget neutral manner, as discussed in section IV. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22069 through 22073).

• Update the IRF PPS payment rates for FY 2021 by the proposed market basket increase factor, based upon the most current data available, with a proposed productivity adjustment required by section 1886(j)(3)(C)(ii)(I) of the Act, as described in section V. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22073 through 22075).

• Adopt the revised OMB delineations, the proposed IRF wage index transition, and the proposed update to the labor-related share for FY 2021 in a budget-neutral manner, as described in section V. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22075 through 22080).

• Describe the calculation of the IRF standard payment conversion factor for FY 2021, as discussed in section V. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22080 through 22081).

• Update the outlier threshold amount for FY 2021, as discussed in section VI. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22084 through 22085).

• Update the cost-to-charge ratio (CCR) ceiling and urban/rural average CCRs for FY 2021, as discussed in section VI. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22085 through 22086).

• Amend the IRF coverage requirements to remove the post-admission physician evaluation requirement as discussed in section VII. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22086 through 22087).

• Amend the IRF coverage requirements to codify existing documentation instructions and guidance as discussed in section VIII. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22087 through 22088).

• Amend the IRF coverage requirements to allow non-physician practitioners to perform certain requirements that are currently required to be performed by a rehabilitation physician, if permitted under state law, as discussed in section IX. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22088 through 22090).

• Describe the method for applying the reduction to the FY 2021 IRF increase factor for IRFs that fail to meet the quality reporting requirements as discussed in section X. of the FY 2021 IRF PPS proposed rule (85 FR 22065, 22090).

IV. Analysis of and Responses to Public Comments

We received 2,668 timely responses from the public, many of which contained multiple comments on the FY

2021 IRF PPS proposed rule (85 FR 22065). We received comments from various trade associations, inpatient rehabilitation facilities, individual physicians, therapists, clinicians, health care industry organizations, health care consulting firms, individual beneficiaries, and beneficiary groups. The following sections, arranged by subject area, include a summary of the public comments that we received, and our responses.

V. Update to the Case-Mix Group (CMG) Relative Weights and Average Length of Stay Values for FY 2021

As specified in § 412.620(b)(1), we calculate a relative weight for each CMG that is proportional to the resources needed by an average inpatient rehabilitation case in that CMG. For example, cases in a CMG with a relative weight of 2, on average, will cost twice as much as cases in a CMG with a relative weight of 1. Relative weights account for the variance in cost per discharge due to the variance in resource utilization among the payment groups, and their use helps to ensure that IRF PPS payments support beneficiary access to care, as well as provider efficiency.

We proposed to update the CMG relative weights and average length of stay values for FY 2021. As required by statute, we always use the most recent available data to update the CMG relative weights and average lengths of stay. For FY 2021, we proposed to use the FY 2019 IRF claims and FY 2018 IRF cost report data. These data are the most current and complete data available at this time. Currently, only a small portion of the FY 2019 IRF cost report data are available for analysis, but the majority of the FY 2019 IRF claims data are available for analysis. We also proposed that if more recent data become available after the publication of the proposed rule and before the publication of the final rule, we would use such data to determine the FY 2021 CMG relative weights and average length of stay values in the final rule.

We proposed to apply these data using the same methodologies that we have used to update the CMG relative weights and average length of stay values each FY since we implemented an update to the methodology to use the more detailed CCR data from the cost reports of IRF provider units of primary acute care hospitals, instead of CCR data from the associated primary care hospitals, to calculate IRFs' average costs per case, as discussed in the FY 2009 IRF PPS final rule (73 FR 46372). In calculating the CMG relative weights, we use a hospital-specific relative value method to estimate operating (routine and ancillary services) and capital costs of IRFs. The process used to calculate the CMG relative weights for this final rule is as follows:

Step 1.

We estimate the effects that comorbidities have on costs.

Step 2.

We adjust the cost of each Medicare discharge (case) to reflect the effects found in the first step.

Step 3.

We use the adjusted costs from the second step to calculate CMG relative weights, using the hospital-specific relative value method.

Step 4.

We normalize the FY 2021 CMG relative weights to the same average CMG relative weight from the CMG relative weights implemented in the FY 2020 IRF PPS final rule (84 FR 39054).

Consistent with the methodology that we have used to update the IRF classification system in each instance in the past, we proposed to update the CMG relative weights for FY 2021 in such a way that total estimated aggregate payments to IRFs for FY 2021 are the same with or without the changes (that is, in a budget-neutral manner) by applying a budget neutrality factor to the standard payment amount. We note that, as we typically do, we updated our data between the FY 2021 IRF PPS proposed and final rules to ensure that we use the most recent available data in calculating IRF PPS payments. This updated data reflects a more complete set of claims for FY 2019 and additional cost report data for FY 2018. To calculate the appropriate budget neutrality factor for use in updating the FY 2021 CMG relative weights, we use the following steps:

Step 1.

Calculate the estimated total amount of IRF PPS payments for FY 2021 (with no changes to the CMG relative weights).

Step 2.

Calculate the estimated total amount of IRF PPS payments for FY 2021 by applying the changes to the CMG relative weights (as discussed in this final rule).

Step 3.

Divide the amount calculated in step 1 by the amount calculated in step 2 to determine the budget neutrality factor of 0.9970 that would maintain the same total estimated aggregate payments in FY 2021 with and without the changes to the CMG relative weights.

Step 4.

Apply the budget neutrality factor from step 3 to the FY 2021 IRF PPS standard payment amount after the application of the budget-neutral wage adjustment factor.

In section VI.D. of this final rule, we discuss the use of the existing methodology to calculate the standard payment conversion factor for FY 2021.

In Table 2, “Relative Weights and Average Length of Stay Values for Revised Case-Mix Groups,” we present the CMGs, the comorbidity tiers, the corresponding relative weights, and the average length of stay values for each CMG and tier for FY 2021. The average length of stay for each CMG is used to determine when an IRF discharge meets the definition of a short-stay transfer, which results in a per diem case level adjustment.

Table 2—Relative Weights and Average Length of Stay Values for the Revised Case-Mix Groups

CMG

CMG description

(M = motor, A = age)

Relative weight

Tier 1

Tier 2

Tier 3

comorbidity

tier

Average length of stay

Tier 1

Tier 2

Tier 3

comorbidity

tier

0101

Stroke M >=72.50

1.0314

0.8818

0.8182

0.7830

0102

Stroke M >=63.50 and M <72.50

1.3174

1.1262

1.0451

1.0001

0103

Stroke M >=50.50 and M <63.50

1.6846

1.4401

1.3363

1.2789

0104

Stroke M >=41.50 and M <50.50

2.1886

1.8710

1.7361

1.6615

0105

Stroke M <41.50 and A >=84.50

2.4829

2.1226

1.9696

1.8850

0106

Stroke M <41.50 and A <84.50

2.8525

2.4385

2.2628

2.1655

0201

Traumatic brain injury M >=73.50

1.1495

0.9399

0.8443

0.7891

0202

Traumatic brain injury M >=61.50 and M <73.50

1.4440

1.1807

1.0606

0.9913

0203

Traumatic brain injury M >=49.50 and M <61.50

1.7411

1.4235

1.2787

1.1952

0204

Traumatic brain injury M >=35.50 and M <49.50

2.1669

1.7718

1.5915

1.4876

0205

Traumatic brain injury M <35.50

2.7369

2.2377

2.0101

1.8788

0301

Non-traumatic brain injury M >=65.50

1.2263

0.9941

0.9185

0.8514

0302

Non-traumatic brain injury M >=52.50 and M <65.50

1.5711

1.2737

1.1768

1.0908

0303

Non-traumatic brain injury M >=42.50 and M <52.50

1.8808

1.5247

1.4087

1.3058

0304

Non-traumatic brain injury M <42.50 and A >=78.50

2.1101

1.7105

1.5805

1.4650

0305

Non-traumatic brain injury M <42.50 and A <78.50

2.3049

1.8685

1.7264

1.6002

0401

Traumatic spinal cord injury M >=56.50

1.3684

1.1612

1.0460

0.9718

0402

Traumatic spinal cord injury M >=47.50 and M <56.50

1.7807

1.5110

1.3611

1.2646

0403

Traumatic spinal cord injury M >=41.50 and M <47.50

2.1371

1.8135

1.6336

1.5177

0404

Traumatic spinal cord injury M <31.50 and A <61.50

3.6185

3.0706

2.7660

2.5698

0405

Traumatic spinal cord injury M >=31.50 and M <41.50

2.7444

2.3288

2.0978

1.9490

0406

Traumatic spinal cord injury M >=24.50 and M <31.50 and A >=61.50

3.5969

3.0522

2.7494

2.5544

0407

Traumatic spinal cord injury M <24.50 and A >=61.50

4.1070

3.4850

3.1394

2.9166

0501

Non-traumatic spinal cord injury M >=60.50

1.3097

1.0178

0.9609

0.8875

0502

Non-traumatic spinal cord injury M >=53.50 and M <60.50

1.6273

1.2646

1.1939

1.1028

0503

Non-traumatic spinal cord injury M >=48.50 and M <53.50

1.8899

1.4687

1.3866

1.2807

0504

Non-traumatic spinal cord injury M >=39.50 and M <48.50

2.2506

1.7491

1.6513

1.5252

0505

Non-traumatic spinal cord injury M <39.50

2.9362

2.2819

2.1543

1.9899

0601

Neurological M >=64.50

1.3673

1.0293

0.9649

0.8770

0602

Neurological M >=52.50 and M <64.50

1.7016

1.2809

1.2008

1.0915

0603

Neurological M >=43.50 and M <52.50

2.0214

1.5216

1.4264

1.2965

0604

Neurological M <43.50

2.3456

1.7657

1.6552

1.5045

0701

Fracture of lower extremity M >=61.50

1.2473

1.0115

0.9585

0.8811

0702

Fracture of lower extremity M >=52.50 and M <61.50

1.5595

1.2647

1.1985

1.1016

0703

Fracture of lower extremity M >=41.50 and M <52.50

1.8956

1.5373

1.4568

1.3390

0704

Fracture of lower extremity M <41.50

2.1660

1.7566

1.6646

1.5300

0801

Replacement of lower-extremity joint M >=63.50

1.1268

0.9068

0.8121

0.7564

0802

Replacement of lower-extremity joint M >=57.50 and M <63.50

1.3248

1.0661

0.9548

0.8893

0803

Replacement of lower-extremity joint M >=51.50 and M <57.50

1.4799

1.1909

1.0666

0.9934

0804

Replacement of lower-extremity joint M >=42.50 and M <51.50

1.7056

1.3726

1.2293

1.1449

0805

Replacement of lower-extremity joint M <42.50

1.9874

1.5994

1.4324

1.3341

0901

Other orthopedic M >=63.50

1.2111

0.9651

0.9133

0.8273

0902

Other orthopedic M >=51.50 and M <63.50

1.5078

1.2015

1.1371

1.0301

0903

Other orthopedic M >=44.50 and M <51.50

1.7744

1.4139

1.3382

1.2122

0904

Other orthopedic M <44.5

2.0373

1.6235

1.5365

1.3918

1001

Amputation lower extremity M >=64.50

1.2960

1.0863

0.9748

0.9004

1002

Amputation lower extremity M >=55.50 and M <64.50

1.6010

1.3419

1.2042

1.1123

1003

Amputation lower extremity M >=47.50 and M <55.50

1.8708

1.5681

1.4072

1.2997

1004

Amputation lower extremity M <47.50

2.2049

1.8481

1.6585

1.5318

1101

Amputation non-lower extremity M >=58.50

1.2999

1.1583

1.0117

0.9810

1102

Amputation non-lower extremity M >=52.50 and M <58.50

1.7367

1.5476

1.3517

1.3107

1103

Amputation non-lower extremity M <52.50

1.9515

1.7390

1.5188

1.4728

1201

Osteoarthritis M >=61.50

1.4251

0.9495

0.8718

1202

Osteoarthritis M >=49.50 and M <61.50

1.7907

1.1930

1.0954

1203

Osteoarthritis M <49.50 and A >=74.50

2.0815

1.3867

1.2734

1204

Osteoarthritis M <49.50 and A <74.50

2.1877

1.4575

1.3383

1301

Rheumatoid other arthritis M >=62.50

1.1277

0.9311

0.8839

0.7847

1302

Rheumatoid other arthritis M >=51.50 and M <62.50

1.5429

1.2740

1.2094

1.0737

1303

Rheumatoid other arthritis M >=44.50 and M <51.50 and A >=64.50

1.7786

1.4686

1.3941

1.2377

1304

Rheumatoid other arthritis M <44.50 and A >=64.50

2.0617

1.7024

1.6161

1.4347

1305

Rheumatoid other arthritis M <51.50 and A <64.50

2.0876

1.7237

1.6363

1.4527

1401

Cardiac M >=68.50

1.1456

0.9392

0.8477

0.7585

1402

Cardiac M >=55.50 and M <68.50

1.4391

1.1799

1.0650

0.9529

1403

Cardiac M >=45.50 and M <55.50

1.7474

1.4326

1.2931

1.1570

1404

Cardiac M <45.50

2.0524

1.6827

1.5188

1.3590

1501

Pulmonary M >=68.50

1.2905

1.0335

0.9655

0.9262

1502

Pulmonary M >=56.50 and M <68.50

1.5913

1.2744

1.1906

1.1421

1503

Pulmonary M >=45.50 and M <56.50

1.8476

1.4796

1.3823

1.3261

1504

Pulmonary M <45.50

2.1421

1.7154

1.6027

1.5375

1601

Pain syndrome M >=65.50

0.9889

0.8919

0.8028

1602

Pain syndrome M >=58.50 and M <65.50

1.1078

0.9991

0.8992

1603

Pain syndrome M >=43.50 and M <58.50

1.3538

1.2209

1.0989

1604

Pain syndrome M <43.50

1.7201

1.5513

1.3963

1701

Major multiple trauma without brain or spinal cord injury M >=57.50

1.3910

1.0912

0.9919

0.9032

1702

Major multiple trauma without brain or spinal cord injury M >=50.50 and M <57.50

1.6988

1.3328

1.2115

1.1031

1703

Major multiple trauma without brain or spinal cord injury M >=41.50 and M <50.50

2.0140

1.5799

1.4362

1.3077

1704

Major multiple trauma without brain or spinal cord injury M >=36.50 and M <41.50

2.2279

1.7478

1.5888

1.4466

1705

Major multiple trauma without brain or spinal cord injury M <36.50

2.4447

1.9179

1.7434

1.5873

1801

Major multiple trauma with brain or spinal cord injury M >=67.50

1.2381

0.9821

0.8820

0.8180

1802

Major multiple trauma with brain or spinal cord injury M >=55.50 and M <67.50

1.5767

1.2506

1.1232

1.0418

1803

Major multiple trauma with brain or spinal cord injury M >=45.50 and M <55.50

1.9345

1.5344

1.3781

1.2782

1804

Major multiple trauma with brain or spinal cord injury M >=40.50 and M <45.50

2.2183

1.7596

1.5803

1.4657

1805

Major multiple trauma with brain or spinal cord injury M >=30.50 and M <40.50

2.6487

2.1010

1.8869

1.7501

1806

Major multiple trauma with brain or spinal cord injury M <30.50

3.4119

2.7063

2.4305

2.2543

1901

Guillain-Barré M >=66.50

1.2031

0.9356

0.9226

0.8738

1902

Guillain-Barré M >=51.50 and M <66.50

1.6292

1.2670

1.2493

1.1832

1903

Guillain-Barré M >=38.50 and M <51.50

2.5939

2.0172

1.9890

1.8838

1904

Guillain-Barré M <38.50

3.8189

2.9699

2.9284

2.7735

2001

Miscellaneous M >=66.50

1.2118

0.9833

0.9005

0.8282

2002

Miscellaneous M >=55.50 and M <66.50

1.4899

1.2090

1.1072

1.0182

2003

Miscellaneous M >=46.50 and M <55.50

1.7634

1.4309

1.3105

1.2052

2004

Miscellaneous M <46.50 and A >=77.50

1.9847

1.6104

1.4749

1.3564

2005

Miscellaneous M <46.50 and A <77.50

2.1338

1.7315

1.5858

1.4583

2101

Burns M >=52.50

1.8033

1.3711

1.1272

2102

Burns M <52.50

2.4055

1.8289

1.5036

5001

Short-stay cases, length of stay is 3 days or fewer

0.1643

5101

Expired, orthopedic, length of stay is 13 days or fewer

0.7262

5102

Expired, orthopedic, length of stay is 14 days or more

1.8015

5103

Expired, not orthopedic, length of stay is 15 days or fewer

0.8454

5104

Expired, not orthopedic, length of stay is 16 days or more

2.0896

Generally, updates to the CMG relative weights result in some increases and some decreases to the CMG relative weight values. Table 3 shows how we estimate that the application of the revisions for FY 2021 would affect particular CMG relative weight values, which would affect the overall distribution of payments within CMGs and tiers. We note that, because we implement the CMG relative weight revisions in a budget-neutral manner (as previously described), total estimated aggregate payments to IRFs for FY 2021 are not affected as a result of the CMG relative weight revisions. However, the revisions affect the distribution of payments within CMGs and tiers.

Table 3—Distributional Effects of the Changes to the CMG Relative Weights

Percentage change in CMG relative weights

Number

of cases

affected

Percentage

of cases

affected

Increased by 15% or more

0.0

Increased by between 5% and 15%

1,830

0.4

Changed by less than 5%

404,940

99.3

Decreased by between 5% and 15%

1,029

0.3

Decreased by 15% or more

0.0

As shown in Table 3, 99.3 percent of all IRF cases are in CMGs and tiers that would experience less than a 5 percent change (either increase or decrease) in the CMG relative weight value as a result of the revisions for FY 2021. The

changes in the average length of stay values for FY 2021, compared with the FY 2020 average length of stay values, are small and do not show any particular trends in IRF length of stay patterns.

The comments we received on our proposal to update the CMG relative weights and average length of stay values for FY 2021 are summarized below.

Comment:

One commenter expressed concern about the decreases in some of the CMG relative weights and average length of stay values from the proposed updates, and questioned whether the FY 2019 data used to update these values for FY 2021 are reliable and valid. This commenter suggested that CMS freeze the CMG relative weights and average length of stay values at FY 2020 levels. This commenter also requested that CMS provide patient level data to allow stakeholders to analyze and model IRF payments and requested that CMS convene regularly scheduled TEPs to discuss and review payment model analyses. Additionally, this commenter also suggested that CMS should modify Table 3 to reflect the payment impacts of updating the CMG relative weights and requested that CMS provide actual changes in payment instead of changes in percentages, as this would provide more transparency related to the actual changes that IRFs may experience.

Response:

The annual updates to the CMG relative weights, which include both increases and decreases to the CMG relative weights, are intended to ensure that IRF payments are aligned as closely as possible with the current costs of care. The relative weights for each of the CMGs and tiers represent the relative costliness of patients in those CMGs and tiers compared with patients in other CMGs and tiers. Additionally, the average length of stay values are only used to determine which cases qualify for the short-stay transfer policy and are not used to determine payments for the non-short-stay transfer cases.

We do not agree that it would be appropriate to freeze the CMG relative weights and average length of stay values at FY 2020 levels because this would require us to base them on older data. Updating these values based on the most recent available data ensures that the IRF case mix system is as reflective as possible of recent changes in IRF utilization and case mix, thereby ensuring that IRF payments appropriately reflect the relative costs of caring for IRF patients. Freezing these values at FY 2020 levels does not allow us to reflect any changes in IRF utilization and case mix that might have occurred over time. As stated in the FY 2021 IRF PPS proposed rule, the FY 2019 data is the most current and complete data available for updating payments.

We are confident that the data is valid and reliable for use in setting IRF PPS payment rates. CMS's contractor (Research Triangle Institute (RTI)) analyzed 2 year's worth of these data (FYs 2017 and 2018) to determine the extent to which the data could predict resource use in the IRF setting. RTI produced two reports containing their analyses and findings, “Analyses to Inform the Potential use of Standardized Patient Assessment Data Elements in the Inpatient Rehabilitation Facility Prospective Payment System (PDF)” (April 2018) and “Analyses to Inform the Use of Standardized Patient Assessment Data Elements in the Inpatient Rehabilitation Facility Prospective Payment System (PDF)” (March 2019). These reports are both available for download from the IRF PPS website at

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/Research.

As most recently discussed in detail in the FY 2020 IRF PPS final rule (84 FR 39054), we believe that these data accurately reflect the severity of the IRF patient population and the associated costs of caring for these patients in the IRF setting. Therefore, we believe it is appropriate to use the FY 2019 data to update the CMG relative weights and average length of stay values for FY 2021 to ensure the case mix system is as reflective as possible of recent changes in IRF utilization and case mix.

With regard to the request for patient-level data, we are unable to make patient assessment and claims data publicly available on the CMS website because these data contain information that can be used to identify individual Medicare beneficiaries. However, stakeholders may obtain these data through the standard CMS data acquisition and Data Use Agreement (DUA) processes. More information on CMS data acquisition process can be found on the CMS website at

https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/FilesForOrderGenInfo/index.

In addition, with regard to the request for the regularly scheduled TEPs to obtain stakeholder input on the routine annual updates to the CMG relative weights and average length of stay values, we provide the methodology for these updates in the IRF PPS proposed rules each year to enable stakeholders to comment on the methodology and provide any suggestions for updating this methodology. Furthermore, we rarely make changes to this methodology, so we believe that stakeholders have had ample opportunity to comment on this methodology over the years, and we do not believe that there would be added value to convening a TEP to discuss this well-established methodology.

With regard to the comment regarding Table 3, we do not agree with the commenter's suggestion that utilizing changes in payment would more adequately project changes in the CMG relative weight values than examining changes in the relative weight values themselves. We would also like to note that the data files published in conjunction with each proposed and final rule contain estimated facility level payment impacts for each IRF in our analysis file to support transparency and assist providers in determining the payment implications of the policy updates contained in each rule. However, we appreciate the commenter's suggested revisions to Table 3 and will take this comment under advisement for future consideration.

After consideration of the comments we received, we are finalizing our proposal to update the CMG relative weights and average length of stay values for FY 2021, as shown in Table 2 of this final rule. These updates are effective for FY 2021, that is, for discharges occurring on or after October 1, 2020 and on or before September 30, 2021.

VI. FY 2021 IRF PPS Payment Update

A. Background

Section 1886(j)(3)(C) of the Act requires the Secretary to establish an increase factor that reflects changes over time in the prices of an appropriate mix of goods and services for which payment is made under the IRF PPS. According to section 1886(j)(3)(A)(i) of the Act, the increase factor shall be used to update the IRF prospective payment rates for each FY. Section 1886(j)(3)(C)(ii)(I) of the Act requires the application of the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Thus, in the FY 2021 IRF PPS proposed rule (85 FR 22073 through 22074), we proposed to update the IRF PPS payments for FY 2021 by a market basket increase factor as required by section 1886(j)(3)(C) of the Act based upon the most current data available, with a productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act.

We have utilized various market baskets through the years in the IRF PPS. For a discussion of these market

baskets, we refer readers to the FY 2016 IRF PPS final rule (80 FR 47046).

In FY 2016, we finalized the use of a 2012-based IRF market basket, using Medicare cost report (MCR) data for both freestanding and hospital-based IRFs (80 FR 47049 through 47068). Beginning with FY 2020, we finalized a rebased and revised IRF market basket to reflect a 2016 base year. The FY 2020 IRF PPS final rule (84 FR 39071 through 39086) contains a complete discussion of the development of the 2016-based IRF market basket.

B. FY 2021 Market Basket Update and Productivity Adjustment

For FY 2021 (that is, beginning October 1, 2020 and ending September 30, 2021), we proposed to update the IRF PPS payments by a market basket increase factor as required by section 1886(j)(3)(C) of the Act, with a productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act. For FY 2021, we proposed to use the same methodology described in the FY 2020 IRF PPS final rule (84 FR 39085) to compute the FY 2021 market basket increase factor to update the IRF PPS base payment rate.

Consistent with historical practice, we proposed to estimate the market basket update for the IRF PPS based on IHS Global Inc.'s (IGI's) forecast using the most recent available data. IGI is a nationally-recognized economic and financial forecasting firm with which we contract to forecast the components of the market baskets and multifactor productivity (MFP). Based on IGI's fourth quarter 2019 forecast with historical data through the third quarter of 2019, the 2016-based IRF market basket increase factor for FY 2021 was projected to be 2.9 percent. Therefore, we proposed that the 2016-based IRF market basket increase factor for FY 2021 would be 2.9 percent. We proposed that if more recent data became available after the publication of the proposed rule and before the publication of this final rule (for example, a more recent estimate of the market basket update), we would use such data to determine the FY 2021 market basket update in this final rule.

According to section 1886(j)(3)(C)(i) of the Act, the Secretary shall establish an increase factor based on an appropriate percentage increase in a market basket of goods and services. Section 1886(j)(3)(C)(ii) of the Act then requires that, after establishing the increase factor for a FY, the Secretary shall reduce such increase factor for FY 2012 and each subsequent FY, by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) of the Act sets forth the definition of this productivity adjustment. The statute defines the productivity adjustment to be equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business MFP (as projected by the Secretary for the 10-year period ending with the applicable FY, year, cost reporting period, or other annual period) (the “MFP adjustment”). The U.S. Department of Labor's Bureau of Labor Statistics (BLS) publishes the official measure of private nonfarm business MFP. Please see

http://www.bls.gov/mfp

for the BLS historical published MFP data. A complete description of the MFP projection methodology is available on the CMS website at

https://www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-andReports/MedicareProgramRatesStats/MarketBasketResearch.html.

Using IGI's fourth quarter 2019 forecast, the 10-year moving average growth of MFP for FY 2021 was projected to be 0.4 percentage point. Thus, in accordance with section 1886(j)(3)(C) of the Act, we proposed to base the FY 2021 market basket update, which is used to determine the applicable percentage increase for the IRF payments, on IGI's fourth quarter 2019 forecast of the 2016-based IRF market basket. We proposed to then reduce this percentage increase by the estimated MFP adjustment for FY 2021 of 0.4 percentage point (the 10-year moving average growth of MFP for the period ending FY 2021 based on IGI's fourth quarter 2019 forecast). Therefore, the proposed FY 2021 IRF update was equal to 2.5 percent (2.9 percent market basket update less 0.4 percentage point MFP adjustment). Furthermore, we proposed that if more recent data became available after the publication of the proposed rule and before the publication of this final rule (for example, a more recent estimate of the market basket and/or MFP), we would use such data to determine the FY 2021 market basket update and MFP adjustment in this final rule.

Based on the more recent data available for this FY 2021 IRF final rule (that is, IGI's second quarter 2020 forecast of the 2016-based IRF market basket rate-of-increase with historical data through the first quarter of 2020), we estimate that the FY 2021 market basket update is 2.4 percent. We note that the fourth quarter 2019 forecast was developed prior to the economic impacts of the Coronavirus disease 2019 (COVID-19) pandemic. This lower update (2.4 percent) for FY 2021 relative to the proposed rule (2.9 percent) is primarily driven by slower anticipated compensation growth for both health-related and other occupations as labor markets are expected to be significantly impacted during the recession that started in February 2020 and throughout the anticipated recovery.

Based on the more recent data available for this FY 2021 IRF final rule, the current estimate of the 10-year moving average growth of MFP for FY 2021 is -0.1 percentage point. This MFP is based on the most recent macroeconomic outlook from IGI at the time of rulemaking (released June 2020) in order to reflect more current historical economic data. IGI produces monthly macroeconomic forecasts, which include projections of all of the economic series used to derive MFP. In contrast, IGI only produces forecasts of the more detailed price proxies used in the 2016-based IRF market basket on a quarterly basis. Therefore, IGI's second quarter 2020 forecast is the most recent forecast of the 2016-based IRF market basket update.

We note that it has typically been our practice to base the projection of the market basket price proxies and MFP in the final rule on the second quarter IGI forecast. For this FY 2021 IRF PPS final rule, we are using the IGI June macroeconomic forecast for MFP because it is a more recent forecast, and it is important to use more recent data during this period when economic trends, particularly employment and labor productivity, are notably uncertain because of the COVID-19 pandemic. Historically, the MFP adjustment based on the second quarter IGI forecast has been very similar to the MFP adjustment derived with IGI's June macroeconomic forecast. Substantial changes in the macroeconomic indicators in between monthly forecasts are atypical.

Given the unprecedented economic uncertainty as a result of the COVID-19 pandemic, the change in the IGI macroeconomic series used to derive MFP between the IGI second quarter 2020 IGI forecast and the IGI June 2020 macroeconomic forecast is significant. Therefore, we believe it is technically appropriate to use IGI's more recent June 2020 macroeconomic forecast to determine the MFP adjustment for the final rule as it reflects more current historical data. For comparison purposes, the 10-year moving average growth of MFP for FY 2021 is projected to be -0.1 percentage point based on IGI's June 2020 macroeconomic forecast compared to a FY 2021 projected 10-year moving average growth of MFP of 0.7 percentage point based on IGI's second quarter 2020 forecast. Mechanically subtracting the negative

10-year moving average growth of MFP from the IRF market basket increase factor using the data from the IGI June 2020 macroeconomic forecast would have resulted in a 0.1 percentage point increase in the FY 2021 IRF increase factor. However, under sections 1886(b)(3)(B)(xi)(II) and 1886(j)(3)(C) of the Act, the Secretary is required to reduce (not increase) the IRF market basket increase factor by changes in economy-wide productivity. Accordingly, we will be applying a 0.0 percentage point MFP adjustment to the IRF market basket increase factor. Therefore, the current estimate of the FY 2021 IRF increase factor is equal to 2.4 percent.

For FY 2021, the Medicare Payment Advisory Commission (MedPAC) recommends that we reduce IRF PPS payment rates by 5 percent. As discussed, and in accordance with sections 1886(j)(3)(C) and 1886(j)(3)(D) of the Act, the Secretary is required to update the IRF PPS payment rates for FY 2021 by an adjusted market basket increase factor which, based on the most recently available data, is 2.4 percent. Section 1886(j)(3)(C) of the Act does not provide the Secretary with the authority to apply a different update factor to IRF PPS payment rates for FY 2021.

The comments we received on the proposed market basket update and productivity adjustment are summarized below.

Comment:

One commenter (MedPAC) stated that Medicare's current payment rates for IRFs appear to be more than adequate and therefore recommended that the Congress reduce the IRF payment rate by 5 percent for FY 2021. The commenter appreciated that CMS cited MedPAC's recommendation, even while noting that the Secretary does not have the authority to deviate from statutorily mandated updates.

Response:

We appreciate MedPAC's interest in the IRF increase factor. However, we are required to update IRF PPS payments by the market basket update adjusted for productivity, as directed by section 1886(j)(3)(C) of the Act.

Comment:

A few commenters supported the proposal to update the market basket and productivity amounts using the latest available data, and encouraged CMS to update these factors using the latest available data as part of the release of the IRF PPS Final Rule. One commenter stated that they were pleased to see an increase in payments to IRFs and further increases to rural providers.

Response:

We appreciate the commenters' support for the proposed IRF annual payment update. As noted in the proposed rule, the final update would be based on a more recent forecast of the market basket and MFP adjustment if available. Therefore, incorporating an updated estimate of the market basket update and productivity adjustment in the final rule is consistent with what we have done historically for the IRF PPS as well as other Medicare PPSs as it reflects more current historical data as well as a revised outlook on the forecasted price pressures faced by providers for FY 2021 and inclusive of economic assumptions regarding the expected impacts from the COVID-19 pandemic.

Comment:

Several commenters expressed concern about the continued application of the productivity adjustment to IRFs. One commenter stated that while they understand that CMS is bound by statute to reduce the market basket update by a productivity adjustment factor in accordance with the PPACA, they continue to be concerned that IRFs will not have the ability to generate additional productivity gains at a pace matching the productivity of the economy at large on an ongoing, consistent basis as contemplated by the PPACA. In addition, the commenter stated that the recent developments related to the public health emergency due to COVID-19 have resulted in further productivity challenges for IRFs. The commenter respectfully requested that CMS carefully monitor the impact that these productivity adjustments will have on the rehabilitation hospital sector, provide feedback to Congress as appropriate, and reduce the productivity adjustment. A few commenters recommended that CMS continue to research productivity factors for health care providers and hospitals, and partner with Congress to implement a more appropriate, health care specific productivity adjustment.

Response:

We acknowledge the commenters' concerns regarding productivity growth at the economy-wide level and its application to IRFs. As the commenter acknowledges, section 1886(j)(3)(C)(ii)(I) of the Act requires the application of a productivity adjustment to the IRF PPS market basket increase factor. We will continue to monitor the impact of the payment updates on IRF Medicare payment adequacy as well as beneficiary access to care.

As stated in the FY 2020 IRF PPS final rule (84 FR 39087), we would be very interested in better understanding IRF-specific productivity; however, the data elements required to estimate IRF specific multi-factor productivity are not produced at the level of detail that would allow this analysis. We have estimated hospital-sector multi-factor productivity and have published the findings on the CMS website at

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/ProductivityMemo2016.pdf.

Comment:

One commenter stated that while they appreciate this modest increase to the payment rate, it is insufficient to offset the impact of cost inflation, sequestration, and the financial impact IRFs are facing due to COVID-19. The commenter encouraged CMS to consider these additional impacts in the final rule.

Response:

Since the publication of the FY 2021 IRF PPS proposed rule, we have incorporated more current historical data and revised forecasts provided by IGI that factor in expected impacts on price and wage pressures from the COVID-19 pandemic. By incorporating the most recent estimates available of the market basket update and productivity adjustment, we believe these data reflect the best available projection of input price inflation faced by IRFs for FY 2021, adjusted for economy-wide productivity, which is required by statute.

After consideration of the comments we received, we are finalizing a FY 2021 IRF update equal to 2.4 percent based on the most recent data available.

C. Labor-Related Share for FY 2021

Section 1886(j)(6) of the Act specifies that the Secretary is to adjust the proportion (as estimated by the Secretary from time to time) of IRFs' costs which are attributable to wages and wage-related costs, of the prospective payment rates computed under section 1886(j)(3) of the Act for area differences in wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the rehabilitation facility compared to the national average wage level for such facilities. The labor-related share is determined by identifying the national average proportion of total costs that are related to, influenced by, or vary with the local labor market. We proposed to continue to classify a cost category as labor-related if the costs are labor-intensive and vary with the local labor market.

Based on our definition of the labor-related share and the cost categories in the 2016-based IRF market basket, we proposed to calculate the labor-related share for FY 2021 as the sum of the FY 2021 relative importance of Wages and Salaries, Employee Benefits, Professional Fees: Labor-related,

Administrative and Facilities Support Services, Installation, Maintenance, and Repair Services, All Other: Labor-related Services, and a portion of the Capital-Related relative importance from the 2016-based IRF market basket. For more details regarding the methodology for determining specific cost categories for inclusion in the 2016-based IRF labor-related share, see the FY 2020 IRF PPS final rule (84 FR 39087 through 39089).

The relative importance reflects the different rates of price change for these cost categories between the base year (2016) and FY 2021. Based on IGI's fourth quarter 2019 forecast of the 2016-based IRF market basket, the sum of the FY 2021 relative importance for Wages and Salaries, Employee Benefits, Professional Fees: Labor-related, Administrative and Facilities Support Services, Installation Maintenance & Repair Services, and All Other: Labor-related Services was 69.0 percent. We proposed that the portion of Capital-Related costs that are influenced by the local labor market is 46 percent. Since the relative importance for Capital-Related costs was 8.5 percent of the 2016-based IRF market basket for FY 2021, we proposed to take 46 percent of 8.5 percent to determine the labor-related share of Capital-Related costs for FY 2021 of 3.9 percent. Therefore, we proposed a total labor-related share for FY 2021 of 72.9 percent (the sum of 69.0 percent for the labor-related share of operating costs and 3.9 percent for the labor-related share of Capital-Related costs). We proposed that if more recent data became available after publication of the proposed rule and before the publication of this final rule (for example, a more recent estimate of the labor-related share), we would use such data to determine the FY 2021 IRF labor-related share in this final rule.

Based on IGI's second quarter 2020 forecast of the 2016-based IRF market basket, the sum of the FY 2021 relative importance for Wages and Salaries, Employee Benefits, Professional Fees: Labor-related, Administrative and Facilities Support Services, Installation Maintenance & Repair Services, and All Other: Labor-related Services is 69.1 percent. We proposed that the portion of Capital-Related costs that are influenced by the local labor market is 46 percent. Since the relative importance for Capital-Related costs is 8.5 percent of the 2016-based IRF market basket for FY 2021, we take 46 percent of 8.5 percent to determine the labor-related share of Capital-Related costs for FY 2021 of 3.9 percent. Therefore, the current estimate of the total labor-related share for FY 2021 is equal to 73.0 percent (the sum of 69.1 percent for the labor-related share of operating costs and 3.9 percent for the labor-related share of Capital-Related costs). Table 4 shows the current estimate of the FY 2021 labor-related share and the FY 2020 final labor-related share using the 2016-based IRF market basket relative importance.

Table 4—FY 2021 IRF Labor-Related Share and FY 2020 IRF Labor-Related Share

FY 2021

labor-related share

FY 2020

final labor

related share

Wages and Salaries

48.6

48.1

Employee Benefits

11.4

Professional Fees: Labor-Related

5.0

Administrative and Facilities Support Services

0.7

0.8

Installation, Maintenance, and Repair Services

1.6

All Other: Labor-Related Services

1.8

Subtotal

69.1

68.7

Labor-related portion of Capital-Related (46%)

3.9

4.0

Total Labor-Related Share

73.0

72.7

Based on the 2016-based IRF market basket relative importance, IGI 2nd quarter 2020 forecast.

Based on the 2016-based IRF market basket relative importance as published in the

Federal Register

(84 FR 39089).

Includes all contract advertising and marketing costs and a portion of accounting, architectural, engineering, legal, management consulting, and home office contract labor costs.

The comment we received on the proposed labor related share for FY 2021 is summarized below.

Comment:

One commenter opposed the proposed increase in the labor related share because it penalizes any facility that has a wage index less than 1.0. The commenter stated that across the country, there is a growing disparity between high-wage and low-wage states and stated that this proposal will continue to exacerbate that disparity and further harm hospitals in many rural and underserved communities. Unless there is sufficient data to support the labor related share increase, the commenter requested that the percentage from 2020 should carry forward into 2021.

Response:

We appreciate the commenter's concern over the increase in the labor-related share; however, we believe it is technically appropriate to use the 2016-based IRF market basket relative importance to determine the labor-related share for FY 2021 as it is based on more recent data regarding price pressures and cost structure of IRFs. Our policy to use the most recent market basket to determine the labor-related share is a policy we have regularly adopted for the IRF PPS, (such as for the FY 2020 IRF PPS final rule (84 FR 39089)), as well as for other PPSs including but not limited to the Inpatient Psychiatric Facility PPS (84 FR 38446) and the Long-term care hospital PPS (84 FR 42642).

After consideration of the comment we received, we are finalizing the use of the sum of the FY 2021 relative importance for the labor-related cost categories based on the most recent forecast (IGI's second quarter 2020 forecast) of the 2016-based IRF market basket labor-related share cost weights as proposed.

D. Wage Adjustment for FY 2021

1. Background

Section 1886(j)(6) of the Act requires the Secretary to adjust the proportion of rehabilitation facilities' costs attributable to wages and wage-related costs (as estimated by the Secretary from time to time) by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the rehabilitation facility compared to the national average wage level for those facilities. The Secretary is required to update the IRF PPS wage index on the basis of information available to the Secretary on the wages and wage-related costs to furnish

rehabilitation services. Any adjustment or updates made under section 1886(j)(6) of the Act for a FY are made in a budget-neutral manner.

For FY 2021, we proposed to maintain the policies and methodologies described in the FY 2020 IRF PPS final rule (84 FR 39090) related to the labor market area definitions and the wage index methodology for areas with wage data. Thus, we proposed to use the CBSA labor market area definitions and the FY 2021 pre-reclassification and pre-floor hospital wage index data. In accordance with section 1886(d)(3)(E) of the Act, the FY 2021 pre-reclassification and pre-floor hospital wage index is based on data submitted for hospital cost reporting periods beginning on or after October 1, 2016, and before October 1, 2017 (that is, FY 2017 cost report data).

The labor market designations made by the OMB include some geographic areas where there are no hospitals and, thus, no hospital wage index data on which to base the calculation of the IRF PPS wage index. We proposed to continue to use the same methodology discussed in the FY 2008 IRF PPS final rule (72 FR 44299) to address those geographic areas where there are no hospitals and, thus, no hospital wage index data on which to base the calculation for the FY 2021 IRF PPS wage index.

The comments we received on these proposals are summarized below.

Comment:

One commenter recommended that CMS repeal the existing hospital wage index and recommended a number of changes to existing wage index policies, but acknowledged that legislative action may be necessary to accomplish some or all of the recommended changes.

Response:

We appreciate the commenter's recommendations on implementing wage index reform and the recommended modifications to the IRF PPS wage index polices. We believe that such recommendations should be part of a broader discussion on wage index reform across Medicare payment systems. These recommendations will be taken into consideration while we continue to explore potential wage index alternatives in the future.

Comment:

Some commenters who were supportive of using the concurrent year's IPPS wage data requested that CMS adopt IPPS wage index polices under the IRF PPS, including geographic reclassification, the imposition of a rural floor, and adjustments that address wage disparities between high and low wage index hospitals. Additionally, some commenters suggested that discrepancies in wage index policies between the IRF PPS and IPPS settings may impact access to care and competition for labor and requested that CMS ensure parity between wage index policies for all hospitals.

Response:

We appreciate the commenters' support for the continued use of the concurrent year's IPPS wage data. However, we note that the IRF PPS does not account for geographic reclassification under sections 1886(d)(8) and (d)(10) of the Act, and does not apply the “rural floor” under section 4410 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted on August 5, 1997). Furthermore, as we do not have an IRF-specific wage index, we are unable to determine the degree, if any, to which a geographic reclassification adjustment or a rural floor policy under the IRF PPS would be appropriate. The rationale for our current wage index policies is fully described in the FY 2006 IRF PPS final rule (70 FR 47880, 47926 through 47928).

With regard to the comments requesting that we adopt similar adjustments to address wage disparities between high and low wage index IPPS hospitals under the IRF PPS, we would like to note that the IRF wage index is derived from IPPS wage data. As such, any effects of this policy on the wage data of IPPS hospitals will be extended to the IRF setting, as this data will be used to establish the wage index for IRFs in the future.

We appreciate the commenters' concerns regarding beneficiary access to care and competition for labor resulting from different applicable wage index policies across different settings of care. While CMS and other stakeholders have explored potential alternatives to the current wage index system in the past, no consensus has been achieved regarding how best to implement a replacement system. These concerns will be taken into consideration while we continue to explore potential wage index reforms and monitor IRF wage index policies. After consideration of the comments we received, we are finalizing our proposed policies as discussed above relating to the wage index.

2. Core-Based Statistical Areas (CBSAs) for the FY 2021 IRF Wage Index

a. Background

The wage index used for the IRF PPS is calculated using the pre-reclassification and pre-floor inpatient PPS (IPPS) wage index data and is assigned to the IRF on the basis of the labor market area in which the IRF is geographically located. IRF labor market areas are delineated based on the CBSAs established by the OMB. The current CBSA delineations (which were implemented for the IRF PPS beginning with FY 2016) are based on revised OMB delineations issued on February 28, 2013, in OMB Bulletin No. 13-01. OMB Bulletin No. 13-01 established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas in the United States and Puerto Rico based on the 2010 Census, and provided guidance on the use of the delineations of these statistical areas using standards published in the June 28, 2010

Federal Register

(75 FR 37246 through 37252). We refer readers to the FY 2016 IRF PPS final rule (80 FR 47068 through 47076) for a full discussion of our implementation of the OMB labor market area delineations beginning with the FY 2016 wage index.

Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues updates and revisions to the statistical areas to reflect the recognition of new areas or the addition of counties to existing areas. In some instances, these updates merge formerly separate areas, transfer components of an area from one area to another, or drop components from an area. On July 15, 2015, OMB issued OMB Bulletin No. 15-01, which provides minor updates to and supersedes OMB Bulletin No. 13-01 that was issued on February 28, 2013. The attachment to OMB Bulletin No. 15-01 provides detailed information on the update to statistical areas since February 28, 2013. The updates provided in OMB Bulletin No. 15-01 are based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2012 and July 1, 2013.

In the FY 2018 IRF PPS final rule (82 FR 36250 through 36251), we adopted the updates set forth in OMB Bulletin No. 15-01 effective October 1, 2017, beginning with the FY 2018 IRF wage index. For a complete discussion of the adoption of the updates set forth in OMB Bulletin No. 15-01, we refer readers to the FY 2018 IRF PPS final rule. In the FY 2019 IRF PPS final rule (83 FR 38527), we continued to use the OMB delineations that were adopted beginning with FY 2016 to calculate the area wage indexes, with updates set forth in OMB Bulletin No. 15-01 that we adopted beginning with the FY 2018 wage index.

On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which provided updates to and superseded OMB Bulletin No. 15-01 that was issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01 provide detailed information on the update to statistical areas since July 15, 2015, and are based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2014 and July 1, 2015. In the FY 2020 IRF PPS final rule (84 FR 39090 through 39091), we adopted the updates set forth in OMB Bulletin No. 17-01 effective October 1, 2019, beginning with the FY 2020 IRF wage index.

On April 10, 2018, OMB issued OMB Bulletin No. 18-03, which superseded the August 15, 2017 OMB Bulletin No. 17-01, and on September 14, 2018, OMB issued OMB Bulletin No. 18-04, which superseded the April 10, 2018 OMB Bulletin No. 18-03. These bulletins established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and provided guidance on the use of the delineations of these statistical areas. A copy of this bulletin may be obtained at

https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf.

We note that on March 6, 2020 OMB issued OMB Bulletin 20-01 (available on the web at

https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf

), but it was not issued in time for development of this rule.

While OMB Bulletin No. 18-04 is not based on new census data, there were some material changes based on the revised OMB delineations. The revisions OMB published on September 14, 2018 contain a number of significant changes. For example, under the new OMB delineations, there would be new CBSAs, urban counties that would become rural, rural counties that would become urban, and existing CBSAs that would be split apart. We discuss these changes in more detail in section VI.D.2.b. of this final rule. We proposed to adopt the updates to the OMB delineations announced in OMB Bulletin No. 18-04 effective beginning with FY 2021 under the IRF PPS. As noted previously, the March 6, 2020 OMB Bulletin 20-01 was not issued in time for development of this rule. While we do not believe that the minor updates included in OMB Bulletin 20-01 will impact the updates to the CBSA-based labor market area delineations, if appropriate, we will propose any updates from this bulletin in the FY 2022 IRF PPS proposed rule.

b. Implementation of New Labor Market Area Delineations

We believe it is important for the IRF PPS to use the latest labor market area delineations available as soon as is reasonably possible to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. We further believe that using the most current delineations possible will increase the integrity of the IRF PPS wage index system by creating a more accurate representation of geographic variations in wage levels. Therefore, we proposed to adopt the new OMB delineations as described in the September 14, 2018 OMB Bulletin No. 18-04, effective beginning with the FY 2021 IRF PPS wage index. We proposed to use these new delineations to calculate area wage indexes in a manner that is generally consistent with the CBSA-based methodologies. As the adoption of the new OMB delineations may have significant negative impacts on the wage index values for certain geographic areas, we also proposed to apply a 5 percent cap on any decrease in an IRF's wage index from the IRF's wage index from the prior FY. This transition is discussed in more detail in section VI.D.3. of this final rule.

(1) Micropolitan Statistical Areas

OMB defines a “Micropolitan Statistical Area” as a CBSA associated with at least one urban cluster that has a population of at least 10,000, but less than 50,000 (75 FR 37252). We refer to these areas as Micropolitan Areas. Since FY 2006, we have treated Micropolitan Areas as rural and include hospitals located in Micropolitan Areas in each State's rural wage index. We refer the reader to the FY 2006 IRF PPS final rule for a complete discussion regarding treating Micropolitan Areas as rural. Therefore, in conjunction with our proposal to implement the new OMB labor market delineations beginning in FY 2021 and consistent with the treatment of Micropolitan Areas under the IPPS, we proposed to continue to treat Micropolitan Areas as “rural” and to include Micropolitan Areas in the calculation of the state's rural wage index.

(2) Urban Counties That Would Become Rural Under the New OMB Delineations

As previously discussed, we proposed to implement the new OMB labor market area delineations (based upon the 2010 Decennial Census data) beginning in FY 2021. Our analysis shows that a total of 34 counties (and county equivalents) that are currently considered part of an urban CBSA would be considered located in a rural area, beginning in FY 2021, under these new OMB delineations. Table 5 lists the 34 urban counties that will be rural with the implementation of the new OMB delineations.

Table 5—Counties That Will Transition From Urban to Rural Status

FIPS county code

County/county equivalent

State

Current CBSA

Current CBSA name

01127

Walker

13820

Birmingham-Hoover, AL.

12045

Gulf

37460

Panama City, FL.

13007

Baker

10500

Albany, GA.

13235

Pulaski

47580

Warner Robins, GA.

15005

Kalawao

27980

Kahului-Wailuku-Lahaina, HI.

17039

De Witt

14010

Bloomington, IL.

17053

Ford

16580

Champaign-Urbana, IL.

18143

Scott

31140

Louisville/Jefferson County, KY-IN.

18179

Wells

23060

Fort Wayne, IN.

19149

Plymouth

43580

Sioux City, IA-NE-SD.

20095

Kingman

48620

Wichita, KS.

21223

Trimble

31140

Louisville/Jefferson County, KY-IN.

22119

Webster

43340

Shreveport-Bossier City, LA.

26015

Barry

24340

Grand Rapids-Wyoming, MI.

26159

Van Buren

28020

Kalamazoo-Portage, MI.

27143

Sibley

33460

Minneapolis-St. Paul-Bloomington, MN-WI.

28009

Benton

32820

Memphis, TN-MS-AR.

29119

Mc Donald

22220

Fayetteville-Springdale-Rogers, AR-MO.

30037

Golden Valley

13740

Billings, MT.

31081

Hamilton

24260

Grand Island, NE.

38085

Sioux

13900

Bismarck, ND.

40079

Le Flore

22900

Fort Smith, AR-OK.

45087

Union

43900

Spartanburg, SC.

46033

Custer

39660

Rapid City, SD.

47081

Hickman

34980

Nashville-Davidson-Murfreesboro-Franklin, TN.

48007

Aransas

18580

Corpus Christi, TX.

48221

Hood

23104

Fort Worth-Arlington, TX.

48351

Newton

13140

Beaumont-Port Arthur, TX.

48425

Somervell

23104

Fort Worth-Arlington, TX.

51029

Buckingham

16820

Charlottesville, VA.

51033

Caroline

40060

Richmond, VA.

51063

Floyd

13980

Blacksburg-Christiansburg-Radford, VA.

53013

Columbia

47460

Walla Walla, WA.

53051

Pend Oreille

44060

Spokane-Spokane Valley, WA.

We proposed that the wage data for all hospitals located in the counties listed above would now be considered rural, beginning in FY 2021, when calculating their respective State's rural wage index. This rural wage index value would also be used under the IRF PPS. We refer readers to section VI.D.3. of this final rule for a discussion of the wage index transition policy due to these changes.

(3) Rural Counties That Will Become Urban Under the New OMB Delineations

As previously discussed, we are implementing the new OMB labor market area delineations (based upon the 2010 Decennial Census data) beginning in FY 2021. Analysis of these OMB labor market area delineations shows that a total of 47 counties (and county equivalents) that are currently considered located in rural areas will now be considered located in urban areas under the new OMB delineations. Table 6 lists the 47 rural counties that will be urban with the implementation of the new OMB delineations.

Table 6—Counties That Will Transition From Rural to Urban Status

FIPS county code

County/county equivalent

State

Proposed CBSA code

Proposed CBSA name

01063

Greene

46220

Tuscaloosa, AL.

01129

Washington

33660

Mobile, AL.

05047

Franklin

22900

Fort Smith, AR-OK.

12075

Levy

23540

Gainesville, FL.

13259

Stewart

17980

Columbus, GA-AL.

13263

Talbot

17980

Columbus, GA-AL.

16077

Power

38540

Pocatello, ID.

17057

Fulton

37900

Peoria, IL.

17087

Johnson

16060

Carbondale-Marion, IL.

18047

Franklin

17140

Cincinnati, OH-KY-IN.

18121

Parke

45460

Terre Haute, IN.

18171

Warren

29200

Lafayette-West Lafayette, IN.

19015

Boone

11180

Ames, IA.

19099

Jasper

19780

Des Moines-West Des Moines, IA.

20061

Geary

31740

Manhattan, KS.

21043

Carter

26580

Huntington-Ashland, WV-KY-OH.

22007

Assumption

12940

Baton Rouge, LA.

22067

Morehouse

33740

Monroe, LA.

25011

Franklin

44140

Springfield, MA.

26067

Ionia

24340

Grand Rapids-Kentwood, MI.

26155

Shiawassee

29620

Lansing-East Lansing, MI.

27075

Lake

20260

Duluth, MN-WI.

28031

Covington

25620

Hattiesburg, MS.

28051

Holmes

27140

Jackson, MS.

28131

Stone

25060

Gulfport-Biloxi, MS.

29053

Cooper

17860

Columbia, MO.

29089

Howard

17860

Columbia, MO.

30095

Stillwater

13740

Billings, MT.

37007

Anson

16740

Charlotte-Concord-Gastonia, NC-SC.

37029

Camden

47260

Virginia Beach-Norfolk-Newport News, VA-NC.

37077

Granville

20500

Durham-Chapel Hill, NC.

37085

Harnett

22180

Fayetteville, NC.

39123

Ottawa

45780

Toledo, OH.

45027

Clarendon

44940

Sumter, SC.

47053

Gibson

27180

Jackson, TN.

47161

Stewart

17300

Clarksville, TN-KY.

48203

Harrison

30980

Longview, TX.

48431

Sterling

41660

San Angelo, TX.

51097

King And Queen

40060

Richmond, VA.

51113

Madison

47894

Washington-Arlington-Alexandria, DC-VA-MD-WV.

51175

Southampton

47260

Virginia Beach-Norfolk-Newport News, VA-NC.

51620

Franklin City

47260

Virginia Beach-Norfolk-Newport News, VA-NC.

54035

Jackson

16620

Charleston, WV.

54065

Morgan

25180

Hagerstown-Martinsburg, MD-WV.

55069

Lincoln

48140

Wausau-Weston, WI.

72001

Adjuntas

38660

Ponce, PR.

72083

Las Marias

32420

Mayagüez, PR.

We proposed that when calculating the area wage index, beginning with FY 2021, the wage data for hospitals located in these counties would be included in their new respective urban CBSAs. Typically, providers located in an urban area receive a higher wage index value than or equal to providers located in their State's rural area. We refer readers to section VI.D.3. of this final rule for a discussion of the wage index transition policy.

(4) Urban Counties That Will Move to a Different Urban CBSA Under the New OMB Delineations

In certain cases, adopting the new OMB delineations involves a change only in CBSA name and/or number, while the CBSA continues to encompass the same constituent counties. For example, CBSA 19380 (Dayton, OH) will experience both a change to its number and its name, and become CBSA 19430 (Dayton-Kettering, OH), while all of its three constituent counties will remain the same. In other cases, only the name of the CBSA will be modified, and none of the currently assigned counties will be reassigned to a different urban CBSA. Table 7 shows the current CBSA code and our proposed CBSA code where we proposed to change either the name or CBSA number only. We are not discussing further in this section these changes because they are inconsequential changes with respect to the IRF PPS wage index.

Table 7—Current CBSAs That Will Change CBSA Code or Title

Proposed CBSA code

Proposed CBSA title

Current CBSA code

Current CBSA title

10540

Albany-Lebanon, OR

10540

Albany, OR.

11500

Anniston-Oxford, AL

11500

Anniston-Oxford-Jacksonville, AL.

12060

Atlanta-Sandy Springs-Alpharetta, GA

12060

Atlanta-Sandy Springs-Roswell, GA.

12420

Austin-Round Rock-Georgetown, TX

12420

Austin-Round Rock, TX.

13460

Bend, OR

13460

Bend-Redmond, OR.

13980

Blacksburg-Christiansburg, VA

13980

Blacksburg-Christiansburg-Radford, VA.

14740

Bremerton-Silverdale-Port Orchard, WA

14740

Bremerton-Silverdale, WA.

15380

Buffalo-Cheektowaga, NY

15380

Buffalo-Cheektowaga-Niagara Falls, NY.

19430

Dayton-Kettering, OH

19380

Dayton, OH.

24340

Grand Rapids-Kentwood, MI

24340

Grand Rapids-Wyoming, MI.

24860

Greenville-Anderson, SC

24860

Greenville-Anderson-Mauldin, SC.

25060

Gulfport-Biloxi, MS

25060

Gulfport-Biloxi-Pascagoula, MS.

25540

Hartford-East Hartford-Middletown, CT

25540

Hartford-West Hartford-East Hartford, CT.

25940

Hilton Head Island-Bluffton, SC

25940

Hilton Head Island-Bluffton-Beaufort, SC.

28700

Kingsport-Bristol, TN-VA

28700

Kingsport-Bristol-Bristol, TN-VA.

31860

Mankato, MN

31860

Mankato-North Mankato, MN.

33340

Milwaukee-Waukesha, WI

33340

Milwaukee-Waukesha-West Allis, WI.

34940

Naples-Marco Island, FL

34940

Naples-Immokalee-Marco Island, FL.

35660

Niles, MI

35660

Niles-Benton Harbor, MI.

36084

Oakland-Berkeley-Livermore, CA

36084

Oakland-Hayward-Berkeley, CA.

36500

Olympia-Lacey-Tumwater, WA

36500

Olympia-Tumwater, WA.

38060

Phoenix-Mesa-Chandler, AZ

38060

Phoenix-Mesa-Scottsdale, AZ.

39150

Prescott Valley-Prescott, AZ

39140

Prescott, AZ.

23224

Frederick-Gaithersburg-Rockville, MD

43524

Silver Spring-Frederick-Rockville, MD.

44420

Staunton, VA

44420

Staunton-Waynesboro, VA.

44700

Stockton, CA

44700

Stockton-Lodi, CA.

45940

Trenton-Princeton, NJ

45940

Trenton, NJ.

46700

Vallejo, CA

46700

Vallejo-Fairfield, CA.

47300

Visalia, CA

47300

Visalia-Porterville, CA.

48140

Wausau-Weston, WI

48140

Wausau, WI.

48424

West Palm Beach-Boca Raton-Boynton Beach, FL

48424

West Palm Beach-Boca Raton-Delray Beach, FL.

In some cases, counties will shift between existing and new CBSAs, changing the constituent makeup of the CBSAs. We consider this type of change, where CBSAs are split into multiple new CBSAs, or a CBSA loses one or more counties to another urban CBSA, to be significant modifications.

Table 8 lists the urban counties that will move from one urban CBSA to another or to a newly proposed or modified CBSA due to the implementation of the new OMB delineations.

Table 8—Urban Counties that Will Move to a Newly Proposed or Modified CBSA

FIPS county code

County name

State

Current CBSA

Current CBSA name

Proposed CBSA code

Proposed CBSA name

17031

Cook

16974